The Science of Employee Recognition and Rewards

The Science of Employee Recognition and Rewards

Table of Contents

Think recognition is fluff? Think again. The open secret of creating engaged workforces lies in motivational psychology — aka, the power of employee Recognition and Rewards.

Why is employee recognition so important?

Employee recognition is a critical part of employee engagement. As such, recognition has an undeniable effect on a business’s performance and profitability.

Many managers use compensation and cash rewards in lieu of thoughtful employee recognition. And is that so wrong? Money is a great motivator, except for one thing. Money alone doesn’t work. Compensation may seem like a no-brainer. But studies show financial incentives can actually rob employees of the joy associated with doing their work and lose value over time.

So what can companies do to keep workforces aligned, motivated, and connected? It’s simple: Lean into employee recognition and rewards.

A few stats that prove it:

  • The #1 reason people leave jobs is limited recognition and praise.
  • 81% of employees say they’re motivated to work harder when their boss shows appreciation.
  • Companies with effective recognition programs see 31% lower turnover.
  • 41% of companies that use peer-to-peer recognition reported seeing increases in customer satisfaction.
  • 50% of employees said they’d stay at their job if they felt appreciated.

The numbers don’t lie — recognition is the employee engagement power tool. Unlike a trophy or pre-determined bonus, spontaneous recognition for great work isn’t something that an employee can anticipate.

As a result, public recognition enforces good behavior and performance, all while forging connections between the people giving and receiving praise.

How do you show employee recognition?

Not all recognition is created equal.

“Thanks for your help on that spreadsheet” is nice to hear. But not as meaningful as, “Your help with this week’s data pull helped me secure a 2-year renewal with our biggest customer. Couldn’t have done it without you!”

See the difference? So take your recognition from stale to stellar by incorporating the 5 components of effective recognition the next time you want to say thank you:

  1. Make recognition public
  2. Be timely and specific
  3. Focus on impact
  4. Celebrate daily wins
  5. Use peer-to-peer recognition

Have the art of recognition down, but need help identifying what to give recognition for? No worries. We’ve put together a list of 50 behaviors to recognize and reward. It covers everything from company milestones, performance wins, learning & development initiatives, and more.

Example: How to do employee Recognition and Rewards

In the last section, we talked about the importance of making recognition public. Managers can praise their team in company meetings, public Slack channels, or the monthly newsletter. But WorkTango has a different solution.

Our Recognition and Rewards platform allows businesses to build a culture of recognition across teams, departments, and locations.

Let’s unpack how in the example below:

Points-based recognition example showing Jordan Monopoly received 350 points for helping his coworkers

This recognition of Jordan was public, timely, focused on impact, and celebrated the kind of work Jordan does every day. Plus, this points-based recognition allows Jordan to earn a reward he actually cares about, which motivates them to keep bringing their best to work. The best part? Because this happened in WorkTango’s public recognition feed, team members across the company were able to read it and “High Five” Jordan for their efforts.

Call us biased, but we think that’s pretty awesome.

Bonus reading: How to Give Great Recognition (Examples and Tips)

How rewards and recognition work together

As we mentioned, money alone isn’t an effective method for employee engagement. That’s not to say incentives and rewards aren’t powerful when combined with other engagement strategies.

Once a business kicks off a recognition program, the best results will come when they’re able to support that recognition with small employee rewards that amplify the power of both components.

Employee recognition and employee engagement

To truly understand the ROI of a recognition and rewards program, we’ll also need to look at the price of not having one: lower engagement, less productivity, and a higher chance of employees walking out the door.

Gallup defines an engaged employee as one who is involved in, enthusiastic about, and committed to their work and workplace. By this definition, disengaged employees have the exact opposite qualities of an engaged one. This means they can be apathetic and unmotivated by their work or environment. And the numbers prove it.

The traits of disengaged employees -- avoid these with employee recognition and rewards

So, what does that mean in dollars? Disengaged employees cost U.S. companies a shocking $450-$550 billion per year in lost productivity.

Sounds crazy, right? But it makes sense if you consider this fact: 70% of U.S. employees are not engaged at work. That’s right. This means a whopping two-thirds of the U.S. workforce feels actively disconnected from their role, company, and day-to-day responsibilities.

So why are so many employees disengaged in the first place?

The answer varies, but most disengagement occurs when employees:

  • Feel their work lacks purpose
  • Believe they are working in a thankless job
  • Feel disconnected with a company’s mission or values
  • Feel stuck in the same routine with no opportunity for growth

As we mentioned, a robust recognition and rewards program can help solve these problems and more. And when you do it right, recognition can bring purpose and appreciation to an employee’s work. In turn, this ultimately increases their engagement and productivity within a role. And when employees are engaged, happy, and productive, businesses win.

Managing an employee rewards program with technology

We hope this guide on the science of employee recognition and rewards has been helpful as you learn about engaging your workforce. And, if you’re ready to take it to the next level, WorkTango’s Employee Experience platform pulls together recognition, rewards, Incentives, and actionable insights under one powerful umbrella.

Our ROI report showed that every company surveyed had a boost in engagement after implementing WorkTango. And, the cost of employee rewards programs decreased by an average of 30%. Plus, it saved an average of five hours per month in HR program management.

So, are you ready to reimagine your rewards program? At WorkTango, we’re revolutionizing how the world’s most forward-thinking companies engage and inspire their people. We offer the only Employee Experience Platform that enables meaningful recognition and rewards, offers actionable insights through employee surveys, and supports alignment through goal setting and feedback.

WorkTango is built for the workplace we all want to be a part of – where priorities become clear, achievements are celebrated, and employees have a voice. So if you’re ready to make work lives better, schedule a demo today.

Learn more